Alfred Schipke, Director, IMF-STI Regional Institute of Training and Former Head of the IMF Mission India, led the assessment of 2021 on the Indian macroeconomic situation by a multilateral body.
In an interview to Toi, the official IMF official event about the need for high fuel taxes.
Quotes: How long is the durable economic recovery? Investment and consumption recovery is expected to continue as reflected in the momentum of high frequency indicators.
Pick up in vaccination must also support further normalization in activities.
At the same time, there is a downside risk and reversed to the economic outlook.
Fuel taxes have emerged as a major problem that can be seen to trigger inflation.
Should the government cut taxes? Fuel taxes are implemented at the central and state levels to an important source of income for the government during a pandemic and helps create fiscal space that is needed to provide support for vulnerable households and increase spending in the field of health care.
Our recommendation is to maintain existing taxes on fuel, while at the same time increase direct support to low-income households.
Reducing fuel taxes in general disproportionately benefit high-income households, making the policy very regressive.
Times ViewThe The conflict of IMF officials might be true elsewhere.
But in India, with a large number of two-wheeled users, it will be inaccurate to say that fuel consumers are only included or even most of the high-income groups.
High tax on fuel also damages the lower middle class too.
Given this situation, the government must roll back several tax increases from the past years.
What about the very worries is the inflation situation? Although moderation recently, inflationary pressures remain, including curved core inflation and supply disorders related to pandemic.
Given the negative output gap, the accommodative monetary attitude, coupled with adequate systemic liquidity through various instruments, while carefully monitoring the increased inflation pressure delivered, remain appropriate.
Although the prospect of short-term inflation is likely to be driven by lower food prices and basic effects, inflationary pressures must be closely monitored, given the strengthening request, increasing commodity prices and higher input prices.
Maintain the tax on the fuel: IMF mod-ex-chip
